The Republicans appear likely to indulge in their worst instincts by agreeing (a) to extend unemployment benefits while (b) signing on to various tax cuts. While perhaps tax cuts would be valuable, the real driver of our economic troubles is a widespread fiscal disaster among individuals, states and localities, and the federal government. At all levels there is too much spending, not enough saving, and therefore too much debt. Tax cuts and spending increases are a formula for more debt, and real debt hawkishness–not the timid embrace of welfare concomitant with tax cuts–is what is called for. If anything taxes should stay the same while massive spending cuts are enacted in order to go to war with the debt. If things continue as they are, there will soon be a complete devaluation of our currency, a debt default and/or hyperinflation, and continued stagnation. Further, these various efforts at stimulating the economy through deficit spending have little to show for them this time around at home, in Japan for the last ten years, or in the US in the 1930s. Only the private sector can create real wealth, and for it to work, this 1/3-of-the-economy-sucking-government to shrink.
The government needs to get out of the way of the economy. In the late 70s, the way to do that was through tax cuts, which were exorbitant before Reagan came into power. But today the way is by its overall mass and impact to shrink: smaller spending, less generous entitlements, and a serious effort to attack the debt. If that does not take place, tinkering with this or that program or tax rate will mean little. Further, the real lesson of the Bush years, one would hope, is that we cannot follow the repeated Republican short-term-thinking which would cut taxes only to maintain generous spending programs. This only kicks the can down the road. The spending is the problem: whether that money comes from borrowing or taxes is somewhat immaterial, either way it is sucked out of the productive economy and will be foisted on taxpayers eventually in some fashion or other.
The worst kind of politics often comes from bipartisanship, where each side gets what it wants, gives up its principles, and the public as a whole suffers due to mutual political expediency by the parties. Obama must be opposed tooth and nail, along with nearly every component of his agenda. If taxes slightly rise to deny him a victory on continued deficit spending, so be it. He must be stopped, rendered impotent, and spending must be cut.
On the merits, unemployment benefits for 99 weeks are ridiculous. People need to work, lean on family and friends, and nothing makes that happen more surely and quickly than a cut in these benefits. Yes, there are bona fide hard luck cases, but there also a great many people that will look for and find a job within weeks of benefits running out. If you subsidize something–in this case unemployment there will be more of it. A much better program would be one where difficult make work was required to receive benefits, or if the government subsidized home sales and moves to places like North Dakota or Texas where work is plentiful. More stringent work requirements for unemployment benefits (in the manner of the old “poor house”) would separate those truly unable to find a job from those running out their benefits to the max, while a spouse or parent or significant other’s income allows a middle class living when coupled with the benefits, plus some highly valuable leisure time.